The grounds have been clarified for carrying out unscheduled audits in the conditions of the moratorium in 2023
Pepeliaev Group advises that a Resolution of the Russian Government[1] has been adopted that has amended the procedure for organising and conducting state control (supervision), and municipal control.
The amendments came into force on 30 December 2022.
Now the identification of indicators of the risk of a violation of mandatory requirements (“risk indicators”) has been classed among the grounds for conducting an unscheduled audit without any restrictions.
Previously, when identifying risk indicators, an audit could only be carried out with respect to extremely high and high-risk facilities, at hazardous production facilities of hazard classes I and II, at hydraulic structures of classes I and II, or with an immediate threat of harm to life and serious harm to the health of citizens, national defence and state security, or with a risk of emergency situations of a natural and/or man-made nature.
This clause has been removed from the legislation and now the presence of risk indicators is the ground for the appointing an unscheduled audit, regardless of the above restrictions.
Audits are appointed upon agreement with the prosecutor’s office.
Please be reminded that a risk indicator is whether there is compliance or deviation from the parameters of the object of control, which in themselves are not violations of mandatory requirements, but with a high degree of probability indicate the presence of such violations[2].
Risk indicators are approved by ministries and control authorities in order to assess the activities of enterprises within the framework of various types of control using a risk-based approach. Risk indicators are currently approved for most types of control. For example, in the framework of state environmental control, one of the risk indicators is a discrepancy between information in financial statements submitted by the controlled entity.
Comment
Pepeliaev Group’s lawyers are ready to provide legal assistance when you liaise with state authorities during state control procedures, as well as litigating, if necessary, to appeal against orders, or have liability imposed on certain persons based on the results of control measures.
[1] The Russian Government’s Resolution No. 2516 “On amending Resolution No. 336 of the Russian Government dated 10 March 2022” dated 29 December 2022.
The amendments came into force on 30 December 2022.
The grounds for unscheduled audits have been extended
The Resolution amends the list of grounds for unscheduled audits in 2023.Now the identification of indicators of the risk of a violation of mandatory requirements (“risk indicators”) has been classed among the grounds for conducting an unscheduled audit without any restrictions.
Previously, when identifying risk indicators, an audit could only be carried out with respect to extremely high and high-risk facilities, at hazardous production facilities of hazard classes I and II, at hydraulic structures of classes I and II, or with an immediate threat of harm to life and serious harm to the health of citizens, national defence and state security, or with a risk of emergency situations of a natural and/or man-made nature.
This clause has been removed from the legislation and now the presence of risk indicators is the ground for the appointing an unscheduled audit, regardless of the above restrictions.
Audits are appointed upon agreement with the prosecutor’s office.
Please be reminded that a risk indicator is whether there is compliance or deviation from the parameters of the object of control, which in themselves are not violations of mandatory requirements, but with a high degree of probability indicate the presence of such violations[2].
Risk indicators are approved by ministries and control authorities in order to assess the activities of enterprises within the framework of various types of control using a risk-based approach. Risk indicators are currently approved for most types of control. For example, in the framework of state environmental control, one of the risk indicators is a discrepancy between information in financial statements submitted by the controlled entity.
Comment
Since risk indicators are established at the level of the subordinate legislation of state authorities, which can be promptly supplemented, the amendment gives control authorities the opportunity to take a flexible approach to the necessary grounds for unscheduled audits in the conditions of the moratorium.
The consequences of conducting a preventive visit at the request of a controlled entity have been supplemented
The resolution grants the control authority the right to decide whether to exclude a scheduled audit from the plan of control measures if a preventive visit has been carried out at the request of the controlled entity within three months before the date of the audit.Comment
Cancellation of a scheduled audit is a right, rather than an obligation, of the control authority. Nevertheless, if the company is ready for an early meeting with officials of the control authority and the main issues of the company's activities can be checked as part of a preventive visit, the company has the right to request a preventive visit with the expectation of the subsequent full-fledged audit possibly being cancelled.
What to think about and what to do
In connection with the above amendments, we recommend the following:- becoming acquainted with the risk indicators for the applicable types of control;
- assessing the company’s activity with regard to whether it complies with these indicators;
- tracking changes in the lists of risk indicators in the future; and
- if the company is included in the plan of control measures, assessing the feasibility of contacting the control authority for a preliminary preventive visit.
Help from your adviser
Pepeliaev Group has an extensive track record of comprehensive business support in issues of compliance with legislation, the identification and assessment of legal risks, and the development of proposals to mitigate the risks identified.Pepeliaev Group’s lawyers are ready to provide legal assistance when you liaise with state authorities during state control procedures, as well as litigating, if necessary, to appeal against orders, or have liability imposed on certain persons based on the results of control measures.
[1] The Russian Government’s Resolution No. 2516 “On amending Resolution No. 336 of the Russian Government dated 10 March 2022” dated 29 December 2022.
[2] Article 23(9) of Federal Law No. 248-FZ “On state control (supervision) and municipal control in the Russian Federation” dated 31 July 2020.